By: Steve Toloken
June 13, 2013
CHENGDU, CHINA — Chinese pipe maker Foshan Rifeng Enterprises Co. Ltd. is investing 1 billion Chinese yuan ($161 million) in a new factory in Tianjin to expand its geographic reach in northern China and take advantage of what it says is rapidly growing business in China's domestic market.
The company, based in Foshan, Guangdong province in southern China, has started construction on the Tianjin plant and will open it with between 40 and 50 extrusion lines, said Li Baiqian, vice general manager, in an interview at the recent China Plastics Piping Association annual conference.
Li said the company's business in China has been growing strongly — sales up more than 10 percent in 2012, and its growth rate significantly accelerating in the first half of this year.
Rifeng says it's been able to take advantage of consolidation in China's pipe market, as rising costs and other economic challenges are squeezing smaller companies and helping larger, better capitalized firms that can more easily improve their quality and cost position.
"In China there are thousands of pipe companies, but after a couple of years of development, the high-quality companies, those that are much bigger, are winning market share," he said.
The company, which has all of its current factories at several campuses in Foshan, makes multilayer aluminum-polyethylene-aluminum pipe, along with PPR, PEX, PE-RT and PVC pipe, with some of its main markets in water supply and heating systems.
It claims to be China's first company to make multilayer pipe, in 1996.
While Li said the China market is strong for Rifeng, with 2012 sales in plastic pipes of 2.25 billion yuan ($363 million), exports have been flat at about 250 million Chinese yuan ($40 million) for the last two years.
China's rising labor costs and its strengthening currency are hurting Rifeng's export competiveness, Li said.
Still, it's making some pushes into overseas markets, exhibiting recently at trade shows in Mexico and Poland. It said in a statement on its website that the Mexican market has been strong, although globally, export sales remain below the 2008 level of about $50 million, Li said.
He said Rifeng's growth in China is beating the market. Last year, the pipe market grew 10 percent, although that was a significant slowdown from recent years as weaker spending on infrastructure and real estate softened demand, according to CPPA figures released at its annual conference, held June 6-7 in Chengdu, Sichuan province.